InvestorQ : Who is an asset stripper in the stock markets and what exactly do they do?
Aashna Tripathi made post

Who is an asset stripper in the stock markets and what exactly do they do?

Answer
image
Tisha Malhotra answered.
1 year ago
Follow

A person who buys a company in order to make profit by peeling off its assets bit by bit and then selling them is typically called an asset stripper. If you have watched movies like Pretty Woman in Hollywood then Richard Gere plays the role of an asset stripper where he buys companies, strips the valuable assets separately and then sells them. These assets may be separate subsidiaries or plant and equipment or property. This process invariably involves the stripping of another sort of asset (the employees) of a number of jobs.

This has been largely responsible for giving asset strippers a bad name. The asset stripper relies on there being a difference in the price of the business as a whole (as valued by a stock market, for example) and the sum of the amounts that can be raised from its parts sold separately. Such a possibility arises most commonly when a company is making losses or a much smaller profit than seems to be justified by its size.

1 Views